PERPUSTAKAAN KUrTTHO J OOOO

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2 PERPUSTAKAAN KUrTTHO J OOOO

3 THE DEVELOPMENT OF PERFORMANCE MEASUREMENT FRAMEWORK IN THE MANAGEMENT OF PUBLIC OFFICE BUILDINGS IN MALAYSIA ZAILAN BINTI MOHD ISA A thesis submitted in fulfilment of the requirement for the award of the Degree of Doctor of Philosophy Fakulti Pengurusan Teknologi Kolej Universiti Teknologi Tun Hussein Onn June 2004

4 BORANG PENGESAHAN STATUS TESIS JUDUL: The Development of Performance Measurement Framework in the Management of Public Office Buildings in Malaysia SESI PENGAJIAN: 2003/2004 Saya: ZAILAN BINTI MOHD ISA mengaku membenarkan tesis (Doktor Falsafah) ini disimpan di Perpustakaan Kolej Universiti Teknologi Tun Hussein Onn dengan syarat-syarat kegunaan seperti berikut: 1. Tesis asalali hakmilik Kolej Universiti Teknologi Tun Hussein Onn. 2. Perpustakaan Kolej Universiti Teknologi Tun Hussein Onn dibenarkan membuat salinan untuktujuan pengajian sahaja. 3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara institusi pengajian tinggi. 4. **Sila Tanda (/) SULIT (Mengandungi maklumat yang berdarjah keselamatan atau Kepentingan Malaysia seperti yang termaktub di dalam AKTA RAHSIA RASMI 1972) TERHAD (Mengandungi maklumat TERHAD yang telali ditentukan oleh Organisasi/badan di mana penyelidikan dijalankan) TIDAK TERHAD ^--TANDIV TANGAN PENJJLIS TANDA TANGAN PENYELIA Alanint Tctap: No. 31 Jnlan 4/1 OB Bandar Barn Bangi Sclangor Prof. Dr. Maziah Ismail Nama Penyelia Tarikh: "Y 1 {.y^.x?.^. Tarikh:

5 Pengesahan Penyelia Saya akui bahawa saya telah membaca karya ini dan pada pandangan saya karya ini adalah memadai dari skop dan kualiti untuk tujuan penganugerahan ijazah Doktor Falsafah Harta Tanah dan Fasiliti. Tandatangan Nama Tarikli Prof. Dr. Maziah Ismail v - 1 -

6 DECLARATION I acknowledge that this thesis is my work that no portion of the work referred to in this thesis has been submitted in support of an application for another degree or qualification of this or any other university or institute of learning. Date : ^ 11

7 Dedication To my beloved family iii

8 iv ACKNOWLEDGEMENTS The completion of this thesis has been a teamwork effort. There are too many people to thank and too little space to do so. Hence, I would like to express my profound gratitude to all who have helped along the way especially to my close friends for their moral supports and encouragement. Appreciation is particularly expressed to the Department of Valuation and Property Services and the Department of Public Service for the provision of financial support throughout this PhD programme. Special thanks are due to the former Director General of the Department of Valuation and Property Services, Datuk Sahari Mahadi for his enquiring my progress and providing constant encouragement, and senior management for having trust in me to pursue this programme. I gratefully acknowledge the supervision, support, encouragement, and patience of my supervisor Professor Dr. Maziah Ismail. The quality of supervision provided the clear direction that I need to sustain the work through the various stages of the three and half years work. I am grateful to Professor Dr. Hinks of Glasgow Caledonian University and Dilanthi, Marjan, and David of Salford University for providing critical advice on my theoretical framework. The participation and co-operation of the Ministry of Works, Ministry of Land and Cooperative Development, and the Department of Survey and Mapping, who have provided information and feedback at data collection stage, are appreciated. Finally, I dedicate this work to my family. I would like to thank my mother, Abby Rosli, Abe Rahmat, Kakcik Hamidah, and Adik Fatimah, for the love, sacrifice, patience, and endless encouragement towards the success of my study.

9 XXI ABSTRACT The research is an exploratory study on operational property management. It seeks to explore the concept of performance measurement in the management of public office buildings in Kuala Lumpur. In this study, a conceptual framework based on the balanced scorecard approach is presented to explore and understand the performance measurement system in property management of operational property in the public sector. It is argued that property management have been a neglected area among practitioners particularly the public property. Hence, this research started as a result of realising the importance of efficient and effective public property management to extract the best value of public investment. In this study, there are two problems: Firstly, it is to develop a conceptual framework for performance measurement in the management of public office buildings. Secondly, it is to determine critical success factors (CSFs) and identify key performance indicators (KPIs) based on the conceptual framework. This research adopts a case study approach as the research strategy in a multiple-case design. Three public office buildings in Kuala Lumpur are identified as the case studies. It is concluded that, in general, the performance measurement system in the case studies can be categorised as mix measurable performance approach of both financial and nonfinancial performance measures. However, the findings show that the case studies ignore the importance of property objectives in monitoring properly performance and their management to achieve effective and efficient management. The approach is not well structured as a management tool and lacking in specification of critical factors to be considered as performance indicators. The study identifies 28 CSFs and their corresponding 120 KPIs within the four perspectives of financial, customer satisfaction, internal processes, and innovation and continuous improvement as laid in the balanced scorecard approach of performance measurement.

10 vi ABSTRAK Penyelidikan ini merupakan kajian ekplorasi ke atas pengurusan harta tanah operasi bagi mengkaji konsep pengukuran prestasi dalam pengurusan bangunan pejabat milik kerajaan di Malaysia. Dalam kajian ini, kerangka konsep yang dibina berdasarkan pendekalan "balanced scorecard" diketengalikan bagi mengkaji dan memaliami sistem pengukuran prestasi dalam pengurusan harta operasi milik kerajaan. Adalah dibahaskan bahawa pengurusan harta merupakan satu bidang yang pinggirkan di kalangan profesional dalam bidang harta tanah terutama sekali harta tanah awam. Oleh itu, penyelidikan ini dicetuskan hasil dari kesedaran tentang kepentingan pengurusan harta kerajaan yang efektif dan berkesan bagi mendapatkan nilai yang terbaik dari pelaburan kerajaan. Dua permasalahan diketengalikan: Pertama, ianya adalah untuk menghasilkan kerangka konsep bagi pengukuran prestasi dalam pengurusan bangunan pejabat milik kerajaan. Kedua, ianya adalah untuk menentukan faktor-faktor kejayaan kritikal dan mengenalpasti indikator-indikator prestasi utama, berdasarkan kerangka konsep tersebut. Penyelidikan ini menggunakan kajian kes sebagai strategi penyelidikan. Tiga buah bangunan pejabat milik kerajaan dijadikan kajian kes. Pada amnya dapat dirumuskan bahawa sistem pengukuran prestasi dalam kajian kes ini dikategorikan sebagai pendekatan bercampur melibatkan pengukur kewangan dengan bukan kewangan. Bagaimanapun penemuan kajian menunjukkan bahawa kajian kes ini tidak mempertimbangkan kepentingan objektif harta tanah dalam memantau pengukuran harta dan pengurusannya bagi mencapai pengurusan yang efektif dan berkesan. Pendekatan tersebut tidak distrukturkan sebagai kaedah pengurusan dan kekurangan dalam menentukan spesifikasi faktur kritikal yang perlu dipertimbangkan dalam menentukan pengukuran indikator. Penyelidikan ini mengenalpasti 28 faktur-faktur kejayaan kritikal dan 120 indikator-indikator prestasi utama dalam empat perspektif kewangan. pelanggan, proses kerja dalaman dan inovasi serta pembangunan yang berterusan sebagaimana ditentukan dalam pendekatan "balanced scorecard".

11 vii TABLE OF CONTENTS CHAPTER TOPIC PAGE TITLE DECLARATION DEDICATION ACKNOWLEDGEMENTS ABSTRACT ABSTRAK TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF APPENDICES GLOSSARY i ii iii iv v vi vii xvii xxii xxiv xxv i INTRODUCTION: THE RESEARCH SCOPE AND PURPOSE 1.1 Introduction 1.2 Background of the Study - General Needs for 2 Performance Measurement in Property Management 1.3 The Objectives of the Study Research Questions Scope of the Research Significance of the Study Extension of Knowledge 9

12 viii The Importance of Property to ] 0 Organisations The Significance of Property Management 11 Process to Public Organisations The Need for a Performance Measurement ] 2 for the Management of Public Property 1.7 Research Design and Methodology Definition Publ ic Property Management Operational Property Public Office Buildings Property Management Units/Departments Performance Measurement Critical Success Factors (CSFs) Key Performance Indicators (KPIs) Thesis Structure 19 II LITERATURE REVIEW 2.1 Introduction 21 Part One: Research Framework 2.2 Context of Operational Property Management Role of Property in an Organisation Property Management Activities Property Management Approaches Property Management Research Framework Conclusion on Property Management 32 Research Framework Part Two: Theoretical Background - Review on 33 Performance Measurement in Property Management 2.4 Concept of Performance Measurement 33

13 XXI General Concept of Performance 33 Measurement Concept of Performance Measurement in 34 Public Sector Concept of Performance Measurement in 35 Property Management Subject 2.5 Studies on Performance Measurement in Property 36 Management 2.6 Performance Measurement Studies in Property 37 Management from Organisation Perspective 2.7 Performance Measurement Studies in Property 49 Management from Property Perspective 2.8 Performance Measurement Studies in Property 57 Management from Organisation and Property Perspective 2.9 Performance Measurement Approaches in Property 79 Management Financial Measures as Performance 82 Measurement Technique Mix Measurable of Financial and Non- 83 financial Measures Technique Property Performance Indicator Metrics Management-by-Variance Technique The EFQM Business Excellence and 87 SERVQUAL Models The Balanced Scorecard Approach Strength and Weakness of the Performance 90 Measurement Approaches 2.11 Gaps in the Literature Geographical Gap - Malaysian Perspective 96

14 XXI From Property Management Subject From Public Sector Perspective - 97 Organisation and Property Aspects Research Design Conclusion 97 III THEORETICAL FRAMEWORK Introduction The Conceptual Framework for Performance 101 Measurement Framework in the Management of Public Office Buildings Phase One: Property Objectives. Strategies 102 and Performance Setting Organisation Vision Property Objectives and Property 104 Management Strategy Performance Measurement Setting Phase Two: Balanced Of Key Performance 108 Indicators Financial Perspective Customer Perspective Internal Process Perspective Phase Three: Innovation and Continuous 121 Improvement Innovation and Continuous 121 Improvement Perspective Feedback To Achieve Customer and Property 125 Management Issues To Achieve Organisational Issues Conclusion 126

15 xi IV RESEARCH DESIGN AND METHODOLOGY 4.1 Introduction Research Approach Research Design The Research Planning Stage Data Collection and Analysis Stage Analysis and Conclusion Stage Study setting Time Horizon Case Study as Research Strategy and 133 Multiple-Cases Design 4.4 Identification of Case Studies Data Collection Sampling Frame Public Office Buildings Public Organisation Property Management Teams Customers of the Public Office Buildings Data Collection Instruments Documentations Archival Records Direct Observations Field Survey - Interviews Field Survey - Questionnaires Pilot Test Interviews Questionnaire Survey Questionnaire Data Analysis Procedures Reliability Analysis Descriptive Statistics Factor Analysis 165

16 xii Content Analysis Interview Questionnaires Documentation Archival Records 166 V PROPERTY DEVELOPMENT AND PUBLIC PROPERTY MANAGEMENT IN MALAYSIA 5.1 Introduction Kuala Lumpur: General Background Property Development Office Property Market and Development Public Office Property in Kuala Lumpur Custodian of Public Property Property Management Approach Centralised Property Management Approach In-house Property Management Approach Outsourced Property Management Approach Property Management Activities Physical Asset Management Organisational Use Management - Space 185 Management Financial Property Management Conclusion 190 VI INTRODUCTION TO CASE STUDIES 6.1 Introduction Location of Case Studies Description of Case Studies CS1-Wisma Tanah The Building Occupier Agencies of the Building 200

17 xiii Users of the Building Property Management of the Building Property Management Process CS2-The Office Building of JUPEM 210 Headquarters The Building Occupier Agencies of the Building Users of the Building Property Management of the Building Property Management Process CS3-The Office Building of JKR 221 Headquarters The Building Occupier Agencies of the Building Users of the Building Property Management of the Building Property Management Process Conclusion 231 VII DATA ANALYSIS: PERFORMANCE MEASUREMENT DEVELOPMENT 7.1 Introduction Policy, Strategy and Performance Setting Vision Property Objectives and Property 238 Management Strategies Setting of Performance Measures Conclusion on Policy, Strategy and 24 i Performance Setting 7.3 The Balance of Performance Indicators Financial Perspective 243

18 xiv Cost Reduction and Cost Control Productivity Improvement Management of Working Capital Asset Utilisation Conclusion on Financial 250 Perspective Customer Perspective The Internal Users The External users Conclusion on Customer 281 Perspective Internal Processes Perspective Property Management Team Teamwork and Coordination Employee Involvement Employee Competence Technology Capability Service Excellence Process Efficiency Conclusion on Internal Processes 298 Perspective 7.4 Innovation and Continuous Improvement Innovation and Continuous Improvement 300 Perspective Employee Capabilities Technology Infrastructure Organisation Alignment Conclusion on Innovation and Continuous 310 Improvement Perspective 7.5 Feedback 312

19 XXI Feedback - To Achieve Organisational 312 Issues Feedback - To Achieve Property 313 Management and Customer Satisfaction Issues 7.6 Conclusion 314 VIII FINDINGS 8.1 Introduction Performance Measurement Framework in the 320 Management of Public Office Buildings Organisation Vision, Property Objectives, 321 and Strategies Setting of Performance Measurement Feedback at Strategic and Operational Levels Critical Success Factors and Key Performance 325 Indicators in the Management of Public Office Buildings Financial Perspective Customer Perspective Internal Processes Perspective Innovation and Continuous improvement 336 Perspective 8.4 Conclusion 337 X CONCLUSION AND RECOMMENDATION 9.1 Introduction Summary of the Chapters' Findings Conclusion of the Study Limitation of the Study 351

20 xvi Limitation of the Research Methodology Recommendations Generalisation of the Findings 357 REFERENCES APPENDICES 359

21 xvii LIST OF TABLES NO. OF TABLES TOPIC PAGE 2.1 Developments Underlying Property Management Research 29 Framework 2.2 A Summary of Property Management Studies in 36 Performance Measurement (Appendix 2 -A) 2.3 A Qualitative Model of Corporate Property Management 42 Effectiveness - Critical Factors and Key Indicators 2.4 Public Property Management - A Summary of Critical 49 Factors and Key Indicators 2.5 Property Performance Measurement for Strategic Goals Key Estate Ratio Subject Areas Criteria for Performance Measurements and Indicators Property Performance Indicator Metrics Property Performance Measurement Criteria Property Performance Measurement Key Performance Indicators - Management-By-Variance 64 Tool 2.12 Performance Measurement Metrics Performance Indicators for Higher Education Property Users Expectations in Teaching Spaces of Higher Education 73 Property 2.15 Strategies and Performance Criteria within Balanced 75

22 XV111 Scorecard 2.16 Strategic Objectives and Measures from the Four 77 Perspectives of Balanced Scorecard 2.17 The Property Performance Indicators By Performance Focus Performance Measurement Approaches In Property 81 Management Studies 2.19 A Summary of Financial and Non-Financial Measures Quality Service Criteria For Professional Process Service Summary of Strength and Weakness of Performance 91 Measurement Approaches in Property Management 3.1 Definitions Of Economy, Efficiency, and Effectiveness 110 Concepts 3.2 Critical Success Factors and Key Performance Indicators 112 from Financial Perspective 3.3 Critical Success Factors and Key Performance Indicators 115 from Customer Perspective 3.4 Critical Success Factors and Key Performance Indicators 118 from Internal Processes Perspective 3.5 Critical Success Factors And Key Performance Indicators 123 from Innovation and Learning Perspective 4.1 Areas of Inquiry on Public Sector Property Management 128 Studies (Appendix 4 - A) 4.2 Practitioners and Researchers in the Focused Interviews 131 (Appendix 4 - B) 4.3 The Four Design Tests Case Study Tactics for Four Design Tests Supply of Purpose Built Office in Malaysia 2002 (Appendix C) 4.6 Public Organisations that Managed the Office Buildings and 137 the Total Office Space in Kuala Lumpur 4.7 Source of Evidences '39

23 xix 4.8 The Respondents for Part One of the Interview Questionnaires The Respondents for Part Two Interview Questionnaires Respondent Rates for the Survey Questionnaires Types of Data Collection Instruments and Respondents for 159 Pilot Test 4.12 Respondent Rates for Survey Questionnaires at Pilot Test Source of Evidences and Modes of Analysis Employment Rates ( ) in Kuala Lumpur (Appendix A) 5.2 Property Stock-Housing, Shop, Commercial Complex, 169 Industrial, and Office Space in Malaysia, and Kuala Lumpur ( ) (Appendix 5 B) 5.3 Purpose-Built Office Space: Total Stock and Number of 171 buildings for Malaysia, and Kuala Lumpur ( ) 5.4 Occupancy Rates for Purpose-Built Office Buildings in 172 Malaysia and Kuala Lumpur and Its Five Zones ( ) 5.5 Supply of Public Office Buildings in Kuala Lumpur, and 174 Malaysia in The Central Government Land Titles According to Ministry in 175 Malaysia 6.1. The Location of the Building in the Case Studies - From the 197 Customer Perspective 6.2. A Summary of the Case Studies Background (Appendix 6 - B) CS1 - Office Space Usage (as at September 2002) CS2 - Office Space Usage (as at September 2002) CS3 - Office Space Usage (as at March 2003) Summary of Occupier Agencies and Controlling Organisation 232 of the Case Studies 7.1. The Organisational Visions and Organisation Objectives, and 237 the Property Management Approaches of the Case Studies

24 XXI 7.2. The Variables in the Internal Users Questionnaire, their Code 252 for, and Mode of Analysis 7.3. The Values from Kaiser-Meyer-OIkin (KMO) and Bartlett's 254 Test Of Sphericity for the Case Studies from Internal Users Surveys 7.4. The Value of MSA of Individual Variable from Internal Users 255 Survey 7.5. CS1 - Rotated Factor Matrix (Loading) for KPIs from Internal 257 Users Perspective 7.6. CS2 - Rotated Factor Matrix (Loading) for KPIs from Internal 258 Users Perspective 7.7. CS3 - Rotated Factor Matrix (Loading) for KPIs from Internal 259 Users Perspective 7.8. CSFs for the Internal Users in the Case Studies CS 1 - Factor Analysis Grouping using Varimax Orthogonal 263 Rotation Method for KPIs from Internal Users Perspective CS2 - Factor Analysis Grouping using Varimax Orthogonal 264 Rotation Method for KPIs from Internal Users Perspective CS3 - Factor Analysis Grouping using Varimax Orthogonal 265 Rotation Method for KPIs from Internal Users Perspective The Variables in the External Users Questionnaire, their Code 269 for, and Mode of Analysis The Values from Kaiser-Meyer-OIkin (KMO) and Bartlett's 269 Test for the Case Studies from External Users Surveys The Values of MSA for Individual Variables from External 271 Users Survey For Each Of The Case Studies CS 1 - Rotated Factor Matrix (Loading) for KPIs from 272 External Users Perspective CS2 - Rotated Factor Matrix (Loading) for KPIs From 273 External Users Perspective